FAQs: Affordable Housing

Affordable housing schemes are government-backed initiatives designed to make homeownership more accessible. These schemes provide various options to help you buy a home, often by reducing the initial cost or offering alternative routes to ownership. While each scheme has its own specific rules, their core aim is to help more people achieve their homeownership goals.

GO BACK

You might encounter several types, depending on your circumstances and local area. The most common include:

  • Shared Ownership: Where you buy a share of a property and pay rent on the rest (we have a dedicated FAQ page on Shared Ownership found here).
  • Help to Buy (Equity Loan): Although the main scheme has now closed for new applications, it still affects many existing homeowners. It allowed you to buy a new-build home with a government equity loan, covering part of the deposit, improving the mortgage terms, you may be offered by reducing the loan to value rate of mortgage funds needed.
  • Discounted Market Sale (DMS): These are properties sold at a reduced price (e.g., 20% to 50% less than market value) to eligible buyers. This discount is usually secured through an ‘affordable housing’ clause in a new development’s mandatory rules that the developer has agreed to before being given planning permission (a “Section 106 agreement (see below)”. The terms of a DMS mandate that future sales must also be at a discounted rate.
  • First Homes Scheme: A newer initiative providing homes to first-time buyers and key workers at a discount of at least 30% below market price. This discount also applies to future sales.

We’ll advise you on which scheme applies to your specific purchase and guide you along the way.

Yes, it can. Lenders will need to be comfortable with the specific terms of the affordable housing scheme you are using. For example, with Shared Ownership, not all lenders offer mortgages for part-owned properties. For schemes like Discounted Market Sale or First Homes, lenders will factor in the discount and any restrictions on selling when assessing your application.

It’s always best to speak with a mortgage advisor who specialises in affordable housing as their expertise can be invaluable in navigating these unique options.

A Section 106 Agreement is a legal agreement between a local authority and a developer. It’s a legally binding contract under the Town and Country Planning Act 1990 designed to make development proposals acceptable.

This often includes a requirement that a certain percentage of homes in a new development are affordable or to secure other community benefits.

If you’re buying a property under a Discounted Market Sale or First Homes scheme, this agreement will be attached to the property’s title. It typically dictates that the property must always be sold at a discounted rate to eligible buyers, even when you come to sell it in the future.

We will carefully explain any such obligations to you, ensuring you fully understand what this means for your future home.

Yes, all affordable housing schemes have specific eligibility criteria, which can vary. These often include:

  • Being a first-time buyer (though some schemes are open to existing homeowners in specific circumstances).
  • Having a household income below a certain threshold.
  • Needing to live in the area (local connection criteria).
  • Not owning another property.

We will confirm the specific criteria for the property you are interested in as part of our legal checks, so you can proceed with confidence.

This depends on the specific scheme and the value of the property.

For Shared Ownership, there are special rules, and you might have options on how you pay Stamp Duty. For Discounted Market Sale or First Homes, Stamp Duty is typically calculated on the discounted price you pay.

We will always calculate your Stamp Duty Land Tax (SDLT) obligations accurately and explain them to you as part of your completion statement, making sure there are no surprises.

Beyond your mortgage and usual household bills, there might be other ongoing costs or responsibilities unique to affordable housing. For example:

  • Shared Ownership: You’ll pay rent on the unowned share, plus service charges.
  • Discounted Market Sale/First Homes: While you own 100% of the discounted price, there might be estate management fees for communal areas.
  • Resale Restrictions: The Section 106 Agreement might include rules about who you can sell to and at what price, affecting your ability to sell on the open market.

We will detail all these aspects from the legal pack. This way you have a full understanding of what’s involved, supporting you every step of the way.